Boca's Only Hospital In A Market Squeeze

October 29, 1996|By KEVIN KRAUSE Staff Writer

BOCA RATON - — With public anxiety growing about the proposed sale of the city's only hospital, its president explained to city officials on Monday that competition from managed-care juggernauts is squeezing it out of the market.

Randy Pierce, chief executive officer of Boca Raton Community Hospital, told City Council members that the spread of large health-management organizations and changes in the health-care industry are threatening the hospital's survival. While last year was the hospital's strongest ever, with nearly $6 million in excess revenue, Pierce said they also had 104 layoffs. "We are proud that we are holding our own," he said. "But we feel that we are reaching the end."

The nonprofit hospital's corporate board recently hired a broker and is considering a buyout from several health care corporations, as well as mergers with other nonprofit hospital organizations.

Yet while the board has been talking to three nonprofit hospital organizations, including Boynton Beach's Bethesda Memorial, those close to the discussions say the deal most likely will be struck with a for-profit company. The board thinks it will get a better deal when the hospital is financially strong, Pierce said.

Although he assured officials that no decisions have yet been made and that discussions on the issue with officials and the public will continue, Pierce outlined several recent developments that sparked the board's concern.

He said insurance companies are dictating where patients go for health care and that Medicare recipients - the hospital's largest block of patients - are increasingly being lured away by HMOs. It has resulted in a recent 15 percent decline in Medicare patients, he said. Also, the hospital's HMO programs and Medicare both are paying them lower reimbursements, he said, amounting to about 46 cents for every dollar the hospital spends.

"We signed with plans that are financially disastrous," he said. "But we want to be able to reach out to the entire community."

The hospital also faces competition from an unlikely source. Many of its specialists have formed associations with large HMOs that are now competing with the hospital's outpatients, he said. "It makes business sense for them, but it's hurting us," he said.

The bottom line is that larger health providers have certain inherent advantages because of their size, he said.

Boca Raton's single hospital is unable to provide care to individuals from birth to death like HMOs can, he said. And while HMOs have large networks providing full services, Pierce said his hospital is not strong in mental-health services and other specialties, such as heart treatment.

The city has asked Florida's attorney general to oversee the hospital's potential sale to ensure that as much as $400 million in community-generated assets is distributed equitably.

Pierce said if the sale goes through, no money will be spent for a year so they can meet with the city to decide how to split it up fairly and evenly. Pierce agreed on Monday to return for a future forum to answer the flood of questions from concerned residents that City Hall has received concerning the hospital's proposed sale.